Prosecutors probe Volkswagen's former CEO over diesel scandal

Volkswagen's former CEO Martin Winterkorn may face German justice over the diesel emissions scandal after all.

Prosecutors labeled Winterkorn a suspect in late September 2015, only to reverse position a few days later. In a statement Monday, they said they were investigating Winterkorn for manipulating the market in Volkswagen shares.

Acting on a formal complaint from German financial regulators, the prosecutors said they were probing claims that the company should have come clean sooner about the possible financial costs of the scandal.

"The Volkswagen Group complied with its obligation to make a statement under the securities trading act on September 22, 2015," the prosecutors said in a statement. "However, there is reason to believe that the requirement to publish a statement about the anticipated significant financial loss to the group may have arisen at an earlier date."

A second former member of the company's executive team is also under investigation. Prosecutors did not provide a name.

The German auto giant falsified pollution tests by installing software (aka "defeat devices") to make vehicles appear cleaner than they were. Once on the road, the cars would pump out as much as 40 times the allowed level of nitrogen oxides.

Shareholders large and small suffered huge losses in the days after the scandal broke last September, as the stock plunged as much as 40%.

Volkswagen's biggest independent shareholder, Norway's state pension fund, reacted by selling a chunk of its holdings, cutting its stake to about $720 million.

The fund is so mad about the scandal that it's taking the company to court. The fund said last month it was joining other investors in suing the company for failing to provide accurate, timely information about its cheating on emissions tests.